stokes: the boys are back

21 October 2008

TESTING PROGRAMME FOR THE STOKES BAY-1 WELL CANNING BASIN,
WESTERN AUSTRALIA

Emerald Oil & Gas NL (“Emerald”) is pleased to provide an update on activities at the Stokes Bay-1 well at the EP104/R1 project.

EP 104/R1 STOKES BAY -1 WELL
CANNING BASIN, WESTERN AUSTRALIA
(Emerald 12.75% Working interest, Operator: ARC Energy.)
Emerald is pleased to announce that the Operator of the Stokes Bay-1 Testing Programme, Buru Energy Limited, advises that equipment and specialised well workover and stimulation personnel are currently on the Stokes Bay-1 wellsite, in the EP 104/R1 Permits located in the Canning Basin, near the town of Derby, Western Australia.

These workover and testing crew expect to commence testing the cavernous reef system intersected in the well within the Nullara Formation carbonates using nitrogen as the circulation fluid. Service Company, BJ Services, are
mobilising a nitrogen unit together with specialised equipment to the wellsite.

As previously announced, final technical work on the Stokes Bay-1 testing programme concluded that nitrogen is the best fluid for circulation of the heavy drilling fluids out of the wellbore above the Nullara Formation carbonate reservoir section in the well.
Nitrogen will be used to reduce the pressure on the formation in an effort to induce a flow from the Nullara Formation. This nitrogen programme is deemed by the Operator to be the applicable programme replacing the programme using surfactant previously proposed to be circulated in the well with fresh water.

Testing Rationale
This testing programme is to test the lost circulation zones (where drilling fluid was lost to the formation) intersected while drilling the Nullara Formation. While
trying to control the lost circulation, the well had intermittently flowed into the wellbore during flow checks. Flows into the Stokes Bay-1 wellbore have been
recorded at rates of up to 4 barrels of fluid per minute of 5,760 barrels of fluid per day, demonstrating very good reservoir parameters. There have been some hydrocarbon indications interpreted to be from the Nullara Formation. While controlling the well and circulating the wellbore, a gas peak of 3816 units was recorded (mud gas peaks of up to 10%). This gas was interpreted to be very dry, being 97% methane and coming from the Nullara Limestone. Tubing and a wellhead were installed.

The Test Programme is designed to lift the heavy drilling fluids and lost circulation drilling material from the wellbore to evaluate the Nullara Formation
for hydrocarbons. If Stokes Bay-1 successfully tests hydrocarbons, then One interpretation indicates this Nullara Trend of hydrocarbons could extend 4.5 kms
to the south east to Point Torment (where Nullara Formation limestones flowed 134,000 cubic feet of gas per day with a trace of oil) and up to 7 kms to the north west.

Emerald, contributing with its 12.75% in the Stokes Bay-1 Test Programme, is looking forward to the results of this Test Programme of Stokes Bay-1 where it is 80 metres high to the Nullara gas test at Point Torment. There is drilled to date a 40 to 45 metre intersection of the Nullara limestones in Stokes Bay-1.
The areal closure could be up to 17 km2.

The Stokes Bay-1 testing to date has not provided any formation fluids from the Nullara and this Test Programme is designed to determine the presence of hydrocarbons and the extent of the reservoir parameters.

Emerald and the EP 104/R1 Joint Venture parties look forward to providing the results of this testing programme and the future programmes dependent on these test results.